Inflation hits 2.5% driven up by rising transport costs

Families see their budgets squeezed as inflation hits 2.5% – driven up by soaring costs in petrol and public transport

  • Cost of transport soared with fuel prices rising by up to 26% since January 2016
  • Cost of food, soft drinks and computer games have also risen squeezing budgets
  • Meanwhile commuters today  were told rail fares will rise by 3.2% next year

Families in Britain are seeing their budgets squeezed as inflation rises faster than expected to hit 2.5 per cent, figures out today reveal.

The soaring costs of travelling on public transport and filling up a car with petrol has fuelled the rise in inflation, the Office for National Statistics today said.

While the cost of computer games has also risen helping to send inflation upwards, despite a fall in the costs of buying clothes and shoes.  

The Consumer Price Index (CPI) rose to 2.5 per cent in July, up from 2.4 per cent in June – the first rise since November last year.

Mike Hardie, head of inflation at the ONS, said: ‘Transport tickets and fuel, along with often erratic computer game prices, drove up costs for consumers.

The Consumer Price Index (CPI) rose to 2.5 per cent in July, up from 2.4 per cent in June – the first rise since November last year


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‘On the other hand, there was a drop in prices for women’s clothing and footwear, and some financial services.’

Commuters face 3.2% rail fare hike amid bitter row between unions and the Government

Commuters are facing the prospect of more eye-watering rail fare rises of 3.2 per cent next year.

The hikes – in the pipeline after the latest figures for the RPI rate of inflation were released – come amid a major row between unions and the government about how to cut costs for travellers.

Union chiefs have flatly dismissed a plea from Transport Secretary Chris Grayling to lower their pay demands. They have long insisted on pegging rises to the RPI measure – which is generally higher than the more widely used CPI. 

Mr Grayling insisted today that the change would just mean railway workers being treated ‘the same as everybody else’. 

But the Rail, Maritime and Transport (RMT) union accused him of trying to cap pay rises and blame workers for high fares.

The latest fare rises are slightly lower than the 3.5 per cent that had been feared – but will still cause fury among commuters suffering with poor services and widespread strikes. 

The annual increases in season tickets and other regulated fares take effect in January, but are based on the July RPI inflation figure.

Mr Grayling said he was ‘very disappointed’ at the reaction from the unions.

Britons were hit with soaring transport costs just as they jetted away for their annual summer holidays this year, with prices soaring by an eye-watering 5 .7 per cent in July compared to the month before.

The ONS said the price of fuels and lubricants had shown ‘considerable’ growth over the period, jumping by as much as 26 per cent since January 2016.

The costs of buying clothes and shoes slumped by 0.4 per cent year on year.

But  households were hit by an increase in food and non-alcoholic drink prices, which rose by 2.3 per cent.  

John McDonnell, Labour’s Shadow Chancellor, responding to the newly released ONS inflation and prices index, said: ‘The latest ONS figures show the disastrous impact of nearly a decade of austerity on the living standards of families.

‘The ONS findings are a stark example of how brutal Tory pay restraint and austerity has led to living costs outstripping earnings for families.

‘These findings coupled with CIPD data that total FTSE 100 Chief Executive pay has increased by 11 per cent in the past year and at a time when rail passengers face a substantial fares increase, will give rise to widespread public anger about the fairness of our society.’

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said: ‘Although inflation ticked up this month this was driven by changes in relatively erratic items, such as computer games and energy prices.

‘Strip away these volatile items and ‘core’ inflation is running at 1.9 per cent, unchanged since last month. 

‘With the prices of clothing falling and the price rises of other imported goods continuing to unwind, consumers may get a respite feeding into slightly lower inflation in the months ahead.

In  a blow for commuters, today’s separate RPI rate of inflation means that rail fares will rise by 3.2 per cent next year

‘This is welcome but it’s unlikely that inflation will fall far, and with wage growth still weak, improvements in living standards are likely to remain sluggish.’ 

And in a blow for commuters, today’s separate RPI rate of inflation means that rail fares will rise by 3.2 per cent next year.

The news comes amid a bitter row between unions and the government about how to cut costs for travellers.

Union chiefs have flatly dismissed a plea from Transport Secretary Chris Grayling to lower their pay demands. 

They have long insisted on pegging rises to the RPI measure – which is generally higher than the more widely used CPI. 

Mr Grayling insisted today that the change would just mean railway workers being treated ‘the same as everybody else’. 

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